Startups cities: What makes them tick?

The award of Expo 2020 global trade fair to Dubai is also expected to drive the growth of new businesses across many sectors, particularly in the construction, logistics and hospitality sectors.

They are young, well-educated, fearless and not afraid to shake up the status quo.
The UAE, particularly Dubai, is increasingly witnessing a relentless wave of young entrepreneurs coming up with innovations that are fast challenging the traditional setups in industries such as hospitality, transportation, healthcare, entertainment, media and many more.
Today's local youth or millennials have become progressive and are increasingly shunning traditional jobs and the routineness of corporate set ups. This 'great transition', from traditional corporate structures to entrepreneurship is slowly becoming a desirable career path and positioning Dubai as one of the fastest growing startups cities in the world.
While family firms have proven themselves to be incredibly successful organisational models, companies in the 21st century are dealing with new challenges and strategic issues. The old rules and structures for corporate growth and profit-making are drastically changing as the new generation of entrepreneurs is seeking instantaneous results. They are looking to building and managing enterprises across vast geographic landscapes, taking advantage of internet accessibility and a connected world to extend their global reach.
The 2015-16 edition of the 'Global Startup Ecosystem Ranking' shows that most of the world's leading startup cities are in the US and Canada. Silicon Valley tops the list, New York is placed second, Los Angeles is third and Boston fourth. Three Canadian cities made the top 20 - Toronto comes in at number 17, Vancouver at 18, and Montreal at 20.
"The rankings of Singapore, Sao Paulo, and Bangalore show that startups are taking shape in the so-called emerging economies," the report states. London is sixth, Berlin ninth, and Singapore 10th.
The report is based on data from 11,000 global startup companies, interviews with more entrepreneurs worldwide, and data from other sources. Its ranking gauges the world's leading startup ecosystems-the broad infrastructure of talent, knowledge, entrepreneurs, venture capital, and companies that make up a startup community.
While the UAE has always been a top contender, it is likely that the Emirates would have scored highly if data were available. With a stable political system, strong banking system, well established infrastructure and a number of free trade zones that offer tax relief and allow 100 per cent foreign ownership, it is no wonder the Gulf country has consistently been favourably ranked by numerous global indices related to economic performance.
For instance, the World Economic Forum (WEF), in its latest 'Global Competitiveness Report 2015-2016' ranked the UAE 17th in the world, scoring highly on infrastructure, the strength of the country's institutions and its power as a trading hub.
"The UAE's excellent macroeconomic environment, highly developed infrastructure and strong institutions provide a solid base for entrepreneurship," the report stated, adding that the UAE has benefited from high levels of openness to trade and investment, "which ensure intense competition and high levels of innovation. Its business environment is welcoming to investment and characterised by regulations that are easy to comply with, a fairly efficient labour market and the presence of sophisticated businesses," it added.
Further, the award of Expo 2020 global trade fair to Dubai is also expected to drive the growth of new businesses across many sectors, particularly in the construction, logistics and hospitality sectors. According to the fair organisers, the trade exhibition is forecast to boost the UAE economy by $23 billion.
Start-up procedure in the UAE
In view of the aforementioned, what can policy-makers and urban leaders do to better facilitate world-class startup ecosystems?
It is evident that the failure of most young firms is not because of competition, but rather due to self-destruction. As such, proper planning and sufficient funding is crucial before launching a new enterprise.
What are the normal startup set-up procedures in the UAE?
While the process of registering a new business in the UAE is generally considered smooth and completely free of any complications, for starters, it could prove a tedious task mostly due to the stringent procedures to be adhered to, in order to qualify for a business licence in the country.
These rigorous permit procedures are intended to ensure that businesses and their premises comply with their respective free zone policies. They are also intended to hamper possible acts of money laundering activities, ensure compliance with the kind of trade and property use requirements of the free zone's bylaw. It's is therefore of utmost importance to seek advice and utilise the services of professional advisors in order to get proper guidance on how to best navigate through the set-up procedures.
All the Emirates in the UAE have special designated free zones. It's important to note that prior to entering into any purchase or lease agreements for a business location, owners are required to verify their compliance with the respective free zone.
The requirements for setting up a business in any of the free zones in the UAE are more or less the same, as it is standard procedure that every company wishing to undertake commercial, consulting or industrial activities within a free zone must obtain a business licence. Similarly, majority of the free zones also require that the business owner have a minimum amount of capital if they are establishing a new company or enterprise, as opposed to just opening a branch of an existing company. However, each free zone has different start-up procedures and fees.
It's important to note that every company set up in the UAE is required to have no less than 51 per cent shareholding by UAE nationals, however, free zones are an exception to this requirement as total foreign ownership is allowed.
Each business licence is valid for one year, starting from the date of issue, and must be renewed annually. There are different kinds of permits that free zones issue, and these licences can be renewed annually as long as a lease agreement is in force with the respective free zone. Also, submission of audit reports is a mandatory requirement for business licence renewal.
The writer is managing partner of Crowe Horwath, heading one of the firm's branches located at Dubai International Financial Centre. Views expressed are his own and do not reflect the newspaper's policy.